bank Archives - African Financial & Economic Data

31 Jan

South Africa Boutique Investor Joins Viceroy in Questioning Capitec

Benguela Global Fund Managers (Pty) Ltd. wrote to Capitec Bank Holdings Ltd. earlier this month questioning its loan practices, even before a short seller alleged the South African lender was concealing write-offs.

Benguela, which manages 3.6 billion rand ($301 million), raised concerns about Capitec’s “aggressive practice of rescheduling arrear loans and advances,” according to a letter dated Jan. 19.

In a separate letter to its investors, Benguela said it had “serious reservations” about Viceroy Research’s approach and its assertion that Capitec should be put under administration was “shocking and irresponsible,” after the short seller released a report about the allegations.

Capitec, which makes unsecured loans mainly to low- and middle-income households, posted its biggest-ever intraday share drop on Tuesday after Viceroy alleged it was hiding write-offs by refinancing defaulted loans with new debt.

It then recovered most of those losses after South Africa’s central bank said it has no evidence to suggest the lender’s stability is in question.

“Benguela totally condemns the Viceroy approach to raising governance issues and it appears to be motivated by pure greed than actual interest in the company,” Chief Investment Officer Zwelakhe Mnguni said in his letter on Tuesday.

Full Disclosure

Speaking at a press conference in Cape Town late Tuesday, Capitec Chief Executive Officer Gerrie Fourie declined to answer questions about whether it had received a letter from Benguela and said he would respond next month. Fourie also denied the allegations made by Viceroy and said the report was full of inaccuracies.

A spokesman for Capitec said on Wednesday that the lender is busy with its response to Benguela. Viceroy didn’t immediately respond to an emailed request for comment.

Capitec discloses “all our figures of rescheduling in a transparent way,” Chief Financial Officer Andre du Plessis said in an email on Tuesday. The company has “absolutely” no plans to take any additional writedowns because it already does a detailed analysis of its book at a weekly credit committee, he said.

To read the full article, click here.

20 Sep

The budget bank rattling South Africa’s financial sector

STELLENBOSCH, South Africa (Reuters) – A budget bank is booming in South Africa’s economic slump, challenging the decades-long dominance of the “big four” lenders and prompting a price war that is driving down banking costs in a country where many people can’t afford an account.

Capitec Bank has doubled its customer numbers over the past five years and quadrupled in market value, even as South Africa’s economic growth has stalled and the country has slid into recession, squeezing household incomes.

It offers a single “no-frills” bank account with low fees, as well as unsecured loans to customers including low-income borrowers, but steers clear of the more complex financial products offered by rivals.

This model has insulated it from the downturn, which has constrained mortgage lending and vehicle finance, key business areas for the four biggest banks: Standard Bank, FirstRand, Barclays Africa and Nedbank.

Those four heavyweights have reigned unchallenged over South Africa’s financial sector since the 1990s.

But Capitec, whose shares have risen more than 300 percent since 2012 and over 30 percent this year, now has a market value of 103 billion rand ($7.9 billion) – closing in on the number four lender Nedbank, which is worth 110 billion rand.

The Stellenbosch-based bank, which launched in 2001, has 9 million customers, of which 4 million are so-called primary clients who have their salaries deposited into these accounts.

“Most of them we’ve taken from other banks,” Capitec Chief Executive Gerrie Fourie told Reuters in an interview, saying that his bank attracts 100,000 to 150,000 new customers a month.

“The economy is helping us,” he added. “People have started questioning why they have to pay banking costs.”

There are clear risks to the bank’s business model of offering unsecured loans to lower-income borrowers without any other forms of lending to counter any losses, according to industry experts.

Capitec’s rise is nonetheless forcing its rivals to respond. They are all fighting back with their own no frills accounts aimed at hard-pressed consumers.

08 Aug

Earthport partners with Access Bank in Africa

Cross-border payment network Earthport announced on Monday that it partnered with Access Bank, one of Africa’s foremost financial institutions, to provide delivery of cross-border payment services into Nigeria.

The AIM-traded firm described Access Bank as one of Nigeria’s ‘leading financial institutions’, and had a strong focus on servicing the Nigerian diaspora.

“It is with great pleasure that Access Bank is partnering with Earthport, a reputable global payment network, to meet the needs of our customers who require a sound and reliable international payment platform,” said Access Bank Nigeria executive director Victor Etuokwu.

“As a top player in the remittance industry in Nigeria, our wide branch network and large customer base will be invaluable to this partnership and we are confident that this relationship will be a mutually beneficial one to both parties.

“This alliance also supports the bank’s vision of being ‘the world’s most respected African bank’ and our mantra of speed, service and services.”

Earthport said the new payment channel had been created in direct response to the need for more effective servicing of remittances and low-value payments sourced from outside the country, which now totalled an estimated $19bn per year, representing 4.7% of the country’s GDP.

The partnership was part of Earthport’s longer term strategy of expansion into the African continent.

“We are delighted to be partnering with Access Bank to extend our global payment network into Nigeria, which is undergoing a rapid transformation,” said Earthport CEO Hank Uberoi.

“With this comes a growing demand for efficient cross-border payment services, which Earthport will deliver to this important market, together with innovative solutions for financial inclusion.

“This is also a significant step in the expansion of Earthport’s global footprint.”

via digitallook